The Bahrain Monetary Agency (BMA) is to make its first BD-denominated Ijara sukuk (Islamic leasing bond) issue.
The BD40 million, fixed rate issue will also be BMA’s, as well as the global Islamic banking industry’s, longest tenor sukuk, having a maturity period of 10 years.
The issue date of the sukuk is 20th July 2004 and the maturity date is 20th July 2014.
The rental return on the sukuk will be 5,125%, to be paid twice a year, on 20th January and 20th July each year.
Minimum subscription has been set at BD10,000. BMA will receive subscriptions for the sukuk from 11th July 2004 until 18th July 2004.
All commercial banks and national insurance companies operating in Bahrain are allowed to subscribe.
Individual and institutional investors can also subscribe through the participating institutions.
“Once again, BMA is coming into the market with a sukuk issue which offers a variation on earlier issues,” said Mr. Waleed Rashdan, Executive Director, Banking Operations, at the BMA. “Our aim, with this issue, is to establish a yield curve benchmark for longer-term securities.”
The sukuk will be listed and traded on the Bahrain Stock Exchange. They can also be traded at prevailing market prices, over-the-counter through the participating banks.
Financial institutions holding the sukuk will also be able to engage in contracts involving the simultaneous sale and future repurchase of the sukuk, in the near future. BMA is in the process of finalizing an Islamic repurchase agreement (Repo), which will provide banks greater flexibility in meeting unforeseen liquidity requirements.
The upcoming offering is the 10th issue of Ijara sukuk to be made by the BMA and the first to be denominated in the local currency; all previous offerings were denominated in US$.
This offering will bring to a total of US$1.13 billion the value of Ijara sukuk issued by the BMA.
The Ijara sukuk are issued by the BMA on behalf of the Government of Bahrain, which enjoys a local currency rating of A from international rating agencies, Standard & Poor’s (S&P) and Fitch. (menareport.com)
© 2004 Mena Report (www.menareport.com)
